RealTime IT News

Is drkoop.com Out of Sick Bay for Good?

For a business that seemed to be on its deathbed in August, drkoop.com Inc. showed signs of making a full recovery Thursday by scooping up community site drDrew.com for about $1.4 million in stock and cash.

drkoop.com acquired all drDrew.com assets from Sherwood Partners Inc., a corporate restructuring firm, for 1.58 million shares of common stock and $150,000 in cash. The acquisition boosts the drkoop.com registered user base to more than two million.

"Some will say this was a risky business-to-consumer move in a battered segment of the industry," said Ed Cespedes, the confident president of drkoop.com largely credited for the firm's turnaround.

"They're wrong. It opens the door to additional licensing revenues and provides solutions for our healthcare provider partners in their efforts to reach teens and young adults."

Dr. C. Everett Koop, former U.S. Surgeon General and chairman of drkoop.com, said the company that was named after him will now be able to cater to a seldom-addressed sector of the medical market -- 14 to 24-year-olds.

Dr. Drew Pinsky, founder for whom drDrew.com was named, will work with and take a seat on the drkoop.com medical advisory board.

Dr. Drew's radio program "Loveline" is currently in its 18th year of production. The television version aired for four years on MTV with a strong emphasis on sex and relationship issues. Launched in Novem ber of 1999 drDrew.com features content and Webcasts, chat rooms, forums, exclusive celebrity interviews and pop culture reviews.

drkoop.com's stock, which reached a high of $24.50 at one point in 2000, wasn't doing much of anything on the news as it hovered around 90 cents per share in morning trading. But perhaps more importantly, the play signals a triumphant victory in the battle many Internet content companies are waging to stay above water.

Last March, auditors said the firm was running out of cash and in July, both MilleniumHealth and Undertherapy.com offered to merge with the firm to save the brand.

drkoop.com managed to maneuver around such offers and survive in August when it secured $20 million in funding from Prime Ventures, JF Shea Ventures, Cramer Rosenthal McGlynn and RMC Capital. It also restructured its management team, signing on former Excite@Home executive Richard Rosenblatt as CEO, Cespedes as its new president and Stephen Plutsky as chief financial officer.

The firm is also battling several lawsuits filed by shareholders who claim the company misled them by delaying a report of the firm's viability. The company also streamlined a bit by laying off a third of its staff, or 42 of 79 employees.

Despite all of the turmoil Cespedes told InternetNews.com Thursday that when he arrived at drkoop.com almost two months ago at the urging of a board member of venture capitalist firm Prime Ventures, he encountered a "dot-com disaster."

"The company was in big trouble," Cespedes said. "They were borrowing money to keep running their business. We saw there were a lot of assets that weren't being valued. It's a great brand built on integrity and trust."

Cespedes said part of the reason investors turned its back on the firm was the industry's perception that B2C was all but dead. In fact, he said, when he looked at drkoop.com's second quarter financials, he saw that about 30 percent of its business was actually B2B driven.

He said a part of the firm's success will have to be to leverage its position in that space -- to grow out the B2